Cash means straight cash, why we trim and more

Here’s the transcript from this week’s Live Q&A Chat.

Cody: Hi everybody. For the rest of the day today while the market is open, I’ll be in the Trading With Cody Chat Room. Post your questions in the chat room or just email us your question at support@tradingwithcody.com and I’ll post the question in the chat room for you and will include your question and my answer in the transcript we send out later.

Cody: Thanks for all the input on Under Armour. I’m leaning towards building a tiny position in the name but am not quite comfortable with how they fix their inventory issues without damaging their brand long-term by selling near-term at cheap prices.

Cody: Ask me anything!

Q. I’ve been taking your advice and trimming. Now I’ve got a pile of cash that I’m earning next to nothing on. I would appreciate you sharing how you invest your cash when you park it on the sidelines.

Q. I know you asked Cody for me cash is a great way to hedge if worried about a pullback. Most times for me when hedged with puts or other means expired worthless or lost money. Just my 2 cents sometimes too much cash not a bad thing.

A. Yes, that said, there’s probably a time for some outright put hedges for most people too. Art not science! 🙂 Cash is cash, cold hard cash or not. But seriously, I just let my cash sit in very low paying savings account or something similar. That make sense? Like Randy Moss once said, Straight Cash.

Q. “Cody, I have owned FB for the last 5 years On your lead first tranches were at 22 And I still own the stock after Trimming and buying all these years ..and YET the momentum of FB monetizing their user base which continues to grow ..WHY TRIM now And the underlying context is …what is your time frame for investing FB now and 5 years ago 10,000 days ? ..Also you seem not not trim your entire portfolio, right ? Cheers.”

A. It’s very easy to look back and wonder why we ever trim or hedge or take profits when so many of our stocks like $FB just keep going thru the roof. But that’s why I always try to remind you guys o the hard times, the pain, the fear you feel when stocks are not through the roof and/or if the market crashes and/or if $FB at some point really gets in trouble, etc. Remember when Nortel which had once been a $200 billion company admitted they’d been fishy with customer-financed business dealings and their earnings reports? I do. It happens. Remember when Apple got in trouble for Steve Jobs and CFO Oppenheimer backdating theirs and others options? I do. I still own the vast majority of my $FB shares from the low $20s and I’ve even nibbled some $FB on occasion in the years since then. But I will always preach taking some profits by doing at least a little trimming when you have them.

Q. With SHOP market correction and their good earning is it good time to buy?

A. I think $SHOP seems like a great company growing 40% per year on the topline. That said, I have not been able to get comfortable with buying $SHOP or with their management team or with the stock. So I’m not planning on buying any.

Q. Thoughts on MZOR? I know from a price perspective, probably not what you look for but you said you never purchased ISRG because you were never comfortable with valuation. Not saying MZOR is going to be 40 billion dollar company but couldn’t this possibly fall in your revolutionary pics? Great product, backing of 100billion dollar company.

A. I never got very much money invested into The Robotics Revolution even though I wrote a book about it three years ago. $MZOR was featured in that book and it, like $ISRG, is a name I find painful to look at because I DIDN’T EVER BUY IT. Then again, the stock is now worth $1.5 billion and the company is only expected to grow 15% topline this year to $70 million. I know a lot of privately-held companies with higher margins and higher growth rates that aren’t valued at nearly 20x sales. I’m not interested in buying $MZOR now and am not sure I would even if it came back down to a reasonable valuation frankly.

Q. With all the Russians hacking into US electoral system. There would be investments for networks to protection. Any company you would recommend to take advantage of it?

A. My favorite network security play is Palo Alto Networks, $PANW. Analysts are expecting another year of 20% topline growth this and next year for PANW and the stock is trading at about 30x near year’s earnings estimates, so it’s not cheap. But it’s the best in the network security business.

Q. With congress public hearing with FB, GooG, Twiter… Do you short-term and long-term impact on these stocks?

A. Not really. Maybe some headline risk for the stock from the public hearings, but long-term it’s a non-event for these companies.

Q. Hi Cody, Hope this finds you and family well . It seems that I use PayPal weekly. And it is a terrific service. Although my primary shopping vehicle is Amazon prime, Paypal seems ubiquitous. And one thing we do know as postulate is that people are going to keep spending. Do you have an opinion on the stock?

A. I’ve tended to be overly bearish on $PYPL because I have not been a terribly happy enterprise customer of the company for many years. Looking at the valuation, the stock is trading at almost 30x next year’s earnings estimates, growing the topline 20% this year and next. Valuation much like $PANW, really. I can’t own them all, but I do have to say I’ve been looking at $PYPL with a fresh eye lately and agree that it’s already ubiquitous and might become more so.

Q. $LITE is moving a lot of 3d sensing products… they have over 300 mil on the books…. does the $AAPL win and the potential for more devices with face id make you consider it again?

A. I can’t own them all, but I do like $LITE. Haven’t pulled the trigger yet. Please grab that quote from the CEO you emailed me and post it in here for everyone to see.

Q. Cody, is there any pick from biotechs you like from risk/reward view? Small, risky, but with huge upside….Your pick AXGN was terrific. I understand it is risky, but there seems to be reward potential unlocked already. Compugen – CGEN? There is coop with Bayer. NVAX??

A. I have my eyes open for the next Axogen $AXGN to put in our portfolio. I’ll look at $CGEN and $NVAX as part of my “eyes wide open” campaign.

Q. “After PI guide and miss own none can`t see reason for buying or owning until company can deliver for a few quarters imo.”

A. Yes, can’t argue that logic.

Q. Cody , should we just hold $PI and ride it down and eventually buy more once settled to lower the average or just jump the wagon in the morning at whatever loss we have? (my average is $29.95?), what should we do here?

A. I need to listen to the their conference call and sleep on it. I’m sick of $PI missing and you know I like to cut my losers…let me listen and then sleep on it.